MODULE 14 ORGANIZATIONAL DESIGN AND CULTURE Although organizations should be designed, many of them evolve. Sometime with a negative impact on the business. “Adaptability and values set the tone” What are the trends in organizational design? What is the nature of organizational culture?

Organizations are becoming flatter with fewer levels of management. ORGANIZATIONAL DESIGN AND CULTURE Trends In Organizational Design MODULE GUIDE 14.1 Organizations are becoming flatter with fewer levels of management. Organizations are increasing decentralization and reducing staff. Organizations are increasing delegation and empowerment. Organizations are becoming more horizontal and adaptive. Organizations are using multiple means of subsystems integration. Organizations are reengineering work processes for greater efficiency. This is true for advanced world class organizations. Many other companies are slow to change.

ORGANIZATIONAL DESIGN AND CULTURE Trends In Organizational Design The process of configuring organizations to meet environmental challenges Span of Control The number of persons directly reporting to a manager Wide spans of control are usually found where workers are performing similar tasks. The more diverse the functions, the more likely the span of control will be narrow.

ORGANIZATIONAL DESIGN AND CULTURE Trends In Organizational Design Decentralization Top management allows lower levels to make many decisions Empowerment Gives people the freedom to do their jobs as they think best Delegation The process of entrusting work to others Three Steps in Delegation 1. Assign responsibility—explain task and expectations to others. 2. Grant authority—allow others to act as needed to complete task. 3. Create accountability—require others to report back, complete task. Decentralization, empowerment and delegation require competent loyal employees, a confident manager and a good feedback and control process.

ORGANIZATIONAL DESIGN AND CULTURE Trends In Organizational Design Bureaucracy Emphasizes formal authority, rules, order, fairness and efficiency Mechanistic Designs Are bureaucratic, using a centralized and vertical structure perform best in stable environments with mostly routine and predictable tasks. Organic Designs are adaptive using a decentralized and horizontal structure perform best in change environments requiring adaptation and flexibility. Although the trend is toward organic designs, many organizations remain bureaucratic and mechanistic. Government organizations are a good example.

ORGANIZATIONAL DESIGN AND CULTURE Trends In Organizational Design This chart shows the two extremes. There are many organizations that are in between.

ORGANIZATIONAL DESIGN AND CULTURE Trends In Organizational Design Differentiation The degree of difference between subsystems in an organization Integration The level of coordination between subsystems in an organization Process Reengineering Increase operating efficiency by reducing unnecessary work steps and streamlining work processes. Process reengineering uses differentiation and integration to design new more efficient systems.

ORGANIZATIONAL DESIGN AND CULTURE Trends In Organizational Design The trend is to bring these organizations together through cross functional teams.

Organizational culture is the personality of the organization. ORGANIZATIONAL DESIGN AND CULTURE Nature of Organizational Design MODUAL GUIDE 14.2 Organizational culture is the personality of the organization. Successful organizations tend to have strong and positive cultures. The observable culture is what you see and hear as an employee or customer. The core culture is found in the underlying values of the organization. The culture of an organization is a driving force in the behavior of the organization’s employees.

ORGANIZATIONAL DESIGN AND CULTURE Nature of Organizational Design Organizational Culture a system of shared values and beliefs that guides the behavior of members Strong Cultures Are clear, well defined and widely shared among members Characteristics of Successful and Strong Organizational Cultures Emphasize teamwork. Allow and support risk taking. Encourage innovation. Make well-being of people a top management priority. Strong cultures are clear, well defined, and widely shared among members. The culture of an organization is largely determined by senior management. Senior management changes can and do change the organization's culture. Sometimes for the better, sometimes for the worse.

ORGANIZATIONAL DESIGN AND CULTURE Nature of Organizational Design Core Culture Beliefs and values shared by an organization Value-based Management communicates, models, and reinforces core values throughout the organization. Core Values at KPMG We lead by example. We work together. We respect the individual. We seek the facts and provide insight. We are open and honest in our communication. We are committed to our communities. Above all, we act with integrity. Stating core values is not as important as exhibiting them.

ORGANIZATIONAL DESIGN AND CULTURE Nature of Organizational Design Observable Culture What you see and hear as you are walking around in an organization Other observable signs of corporate culture include private offices and parking spaces for senior managers.

MANAGEMENT TIPS S C O R E S—How to read an organization’s culture S - How tight or loose is the structure? C - Are decisions change oriented or driven by the status quo? O - What outcomes or results are most highly valued? R - What is the climate for risk taking, innovation? E - How widespread is empowerment, worker involvement? S - What is the competitive style, internal and external? These are good questions to ask during a job interview.